Last modified on December 1st, 2022
By Stacy Holden
Despite a historic climb in rent prices this past year and surging demand for units nationwide, today’s property managers are contending with a host of challenges, from rising material costs, to cutthroat competition, and perhaps even some belt-tightening efforts amid wider economic concerns.
Recent research from AppFolio Property Manager – our 2022 Property Management Industry Pulse – outlines the many challenges facing rental operators amid a high-demand but revenue-hungry market. The report, which polled more than 1,000 employees of US property management companies, also documents the struggles property management businesses face with “shiny” new proptech solutions. Many new solutions promise time and cost savings but ultimately prove to be clunky and inadequate due to poor integrations with existing (legacy) property management software.
AppFolio understands that truly efficient business software should provide a clear return on investment (ROI), boost employee productivity and satisfaction, and ultimately unlock revenue to grow the business. Our data shows, however, that many property management businesses continue to struggle in these areas.
Proptech: A Key Component in Scaling Operations
As external economic pressures increase, it’s not surprising that operational efficiency (62%) and revenue generation (54%) were the two most commonly cited challenges of 2022. A superior, seamless, and sophisticated property management software platform is the single most critical factor in solving both of these challenges.
Unfortunately, many rental operators today may fail to see tech-enabled benefits because of ineffective or dated property management software. Additionally, these core property management systems are unable to effectively integrate with partners providing industry-leading technology solutions.
What’s more, there may be a disconnect between property management executives and frontline staff in perception of the effectiveness of the tools they’ve deployed. In fact, frontline staff “on the ground” are 11 times more likely than executives to consider innovation/technology a top challenge, which means their potential struggles with the business’ technology may not be reaching decision-makers.
And so the efficiency gap in tech adoption persists, meaning property management businesses are not yet realizing the full power of their tools. Still, property management teams need to adopt the mindset that technology fosters success not only in one area, but throughout the entire business – streamlining workflows including payments and maintenance requests, enabling virtual showings, and more. All allow property management teams to pivot to other critical activities that ultimately impact the bottom line positively.
In many ways, this draws parallels to the restaurant industry, coping with – and eventually growing from – the changes forced by COVID-19 and “going digital” (fulfilling orders and deliveries, or automating elements of wait service). While at first, restaurants may have viewed this as an impassable hurdle, these services went from “confusing” to essential. Similarly, with property management systems, technology is an enabler, not a hindrance.
Is the Talent Market Normalizing?
While The Great Resignation no doubt dominated discussions even within our industry last year, there appears to be some normalization in staffing, as organizations continue to make adjustments. Such change has now brought other economic hurdles for property management businesses to the fore. Illustrating this point: human resources, staffing and recruitment were cited as the top challenge by more than half of respondent’s last year, but in 2022 that figure dropped significantly, to 25%. Instead, inflationary pressures have likely elevated efficiency and revenue as key concerns.
But effective teams are still at the heart of any successful business, and building or retaining talent will always pose new challenges. Luckily, technology has a central role in making the day-to-day easier for employees and attracting top talent as well.
For instance, training a new employee to track payments via index cards (yes, people still use them!) or even via Excel (versus a modern property management software to automate payments) is the equivalent to offering a new employee a typewriter. Sounds ludicrous, right? The efficiency and scalability that a modern property management platform enables in transforming a business is a night-and-day difference compared to manual operations.
Luckily, the perks of technology in real estate are making property management jobs both easier and more engaging, and so more desirable. If teams are empowered with the right tools, there’s no doubt they can also make an impact on residents’ lives, including positively influencing access to housing, for example.
Still, the bottom line is that to keep talent in place, our industry needs to truly emphasize employee experience – by providing tech, training, and tools.
Property management companies need their proptech to unlock productivity and leave customers satisfied. Yet, our data shows that some 40% of managers are unhappy with the integration between their existing tech stack and new services meant to streamline work or enhance customer experience.
Some property managers are running clunky legacy software developed in the 1980s and, in some cases, may even be based on several different database infrastructures. The system architecture of these outdated solutions causes faulty (and frustrating) partner integrations and makes a single source of truth an impossibility. AppFolio Property Manager is instead powered by flexibility, impressive functionality and ease of access, making it true software-as-a-service (SaaS) technology.
In fact, we believe that certification – meaning potential partners are vetted and approved – is a necessary step for any software integration, along with true partnership. Integrations that we have included in AppFolio Stack™the marketplace we launched this summer, are the result of close collaboration between our development teams prioritizing the experience of the end user. The platform enables AppFolio Property Manager users to provide specialized solutions for those managing complex portfolios. In it, we have introduced thoughtful solutions where partners have direct access to collaborate with our developers. This means they have the tools and information needed to develop stable integrations atop a strong, reliable system architecture.
It is an approach we feel will help change the mindset around integrations and eliminate futile finger-pointing that our customers have experienced with other software providers and vendors.
Rental operators have a true partner in AppFolio Property Manager. In fact, even prior to the AppFolio Stack™ launch, 70% of our users said they remained satisfied with the technology’s ability to help them address key challenges (compared to only 51% of users of other property management solutions). This is an area we have always prioritized, and now we are bringing the same approach to our integration marketplace.
Delivering on the Tech Experience
While rental operators increasingly embrace efficiencies fueled by technology, the industry has a ways to go in standardizing such use. Nevertheless, our data suggests property management companies are addressing today’s challenges head-on, and time- and cost-saving platforms like AppFolio Property Manager may be key in avoiding new hurdles.
It is also clear that a substantial portion of renters now overwhelmingly choose to lease from companies that provide the best experience. While this has generational tendencies, all of today’s interest rates simply expect more! So, what better way for property management businesses to stand out than providing residents (and employees) a central platform with industry-leading tools and capabilities? It will no doubt deliver a satisfying experience from start to finish.